Updated: September 10, 2021 7:39:17 am
The Supreme Court Thursday upheld a 2017 arbitral award of Rs 2,782.33 crore with further interest favouring Anil Ambani’s Reliance Infrastructure-promoted Delhi Airport Metro Express Pvt Ltd (DAMEPL) in connection with the construction of the 22.7-km Airport Metro Express Line project.
A bench of Justices L Nageswara Rao and S Ravindra Bhat upheld the May 11, 2017, award to DAMEPL and set aside the January 15, 2019, order of the Delhi High Court division bench which partly set aside the arbitral award.
DMRC had invoked arbitration after DAMEPL terminated the concession agreement on the ground that defects pointed out in construction were not cured by DMRC within the stipulated 90 days.
As per the concession agreement, all civil works as well as appointment of consultants, land acquisition, and other clearances from the government and other authorities were to be obtained by DMRC while the design, supply, installation, testing and commissioning of various systems like rolling stock, power supply, overhead equipment, signalling, track system, platform, screen doors, ventilation, architectural finishing etc. were to be provided by DAMEPL.
However, with flaws being noticed in the construction after it had begun operations, DAMEPL sent notice to DMRC “to cure the defects” in 90 days.
The Arbitral Tribunal “undertook an in-depth analysis of the defects in the civil structure and steps taken for their repair/rectification” and “concluded that there were as many as 1,551 cracks in 367 girders, i.e., 72% of the girders were affected by such cracks”. It further held that “these defects were neither cured nor effective steps taken by DMRC within the cure period up to 08.10.2012, constituting a material breach on the part of DMRC”.
DMRC challenged this in the High Court where a single judge upheld the award. But on appeal, a division bench reversed the single judge findings and partly set aside the arbitral award against which DAMEPL approached the SC.
The SC said that courts, while dealing with applications filed under Section 34 of the Arbitration and Conciliation Act, 1996, “are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law”.
The court said there is “no ambiguity in the findings of the Arbitral Tribunal regarding the time given for curing the defects and the effective date of termination of the Concession Agreement” and, therefore, it is “not in agreement with the findings of the Division Bench that there is an ambivalence in the award concerning the date of termination, having a bearing on the final outcome of the award”.
The SC also flagged what it termed is “a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and, thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award”, and said “this approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards”.
The ruling added “that apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions”.
Anuj Dayal, DMRC executive director, corporate communications, said: “The Hon’ble Supreme Court has pronounced judgment in the Airport Metro Express line matter today and the appeal of DAMEPL has been allowed. The judgment is being currently analysed for future course of action.”
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